Can M&G's Dobell turn around performance?

We asked a raft of investment managers whether the time is ripe to back M&G's Tom Dobell for a performance turnaround.

Can M&G's Dobell turn around performance?

27 May, 2014

Tim Cockerill, investment director, Rowan Dartington

‘Tom Dobell has had a very tough time in recent years. The portfolio has taken on a more esoteric look than it had some years back and while I believe it is staying true to its recovery ethos, the mix of stocks is probably as wide as it has ever been.

‘He has suffered from holding some poorly performing stocks, such as African Minerals (coal mining) and Quindell (technology), which are both very different in nature. On the flip side, stocks such as Prudential have delivered strong returns.

‘The fund has always taken a long-term investment approach. If the majority of the stocks he has bought offer value, then in time this will be recognised and performance should return. But the market remains in a fickle mood and I don’t think we’ll see performance change a great deal for a little while yet.’

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‘Tom Dobell is a good fund manager but unfortunately his style or preference has not suited recent markets driven by sentiment and where the strongest sectors have been consumer services, food and retail and consumer durables. He has stuck to his style, ignoring the macro, supporting struggling businesses irrespective of their sector, where he sees long-term value. This has served him well over the longer term but is not likely to help the fund to do well in the short term or in all market conditions.’ [These are Archer’s own views and not those of Investec]

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‘I don’t have any M&G Recovery, I sold the few holdings I had left last year. I like the deep value/recovery/contrarian story (we have money with the Schroder Recovery funds and Alistair Mundy of Investec). However, I think the long-term success of M&G and the Recovery fund is a double edged sword, as it is so large and possibly unwieldy it could take longer than many people expect for performance to turn around.

‘While I agree with his positioning (underweight financials/consumer), 89 holdings in a £7 billion fund with 20% in AIM/other in the current volatile markets will continue to result in some performance pressures, both in capital terms and liquidity.

‘Tom Dobell has an excellent long-term record, and you don’t become a bad manager overnight so I expect him to produce good numbers again but in the short term I believe I could make a better return elsewhere.’

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‘I have followed Tom’s career for more than a decade and I really admire the fact his style, approach, investment philosophy and commitment have not changed during this time.

‘Whenever you invest in a fund you need to understand what you are buying. In the £7 billion M&G Recovery fund you are buying a portfolio that is broadly diversified of roughly 100 companies with a leaning to mid cap names, a value bias, high engagement with the corporations he invests in and high conviction. ‘The fund is not afraid to take considerable stakes in the underlying share capital of the companies he invests in and 10% positions are not uncommon. His portfolio turnover is incredibly low and the fund tends to have a lower beta than the market.

‘Taking this into consideration, it isn’t surprising he hasn’t partaken in the beta rally of the last few years in the UK market. It is a great diversifier for other UK All Companies funds. M&G has faith in him as the manager to see it through this rough patch; so do I.’

Leave a comment!

‘Tom Dobell has had a very tough time in recent years. The portfolio has taken on a more esoteric look than it had some years back and while I believe it is staying true to its recovery ethos, the mix of stocks is probably as wide as it has ever been.

‘He has suffered from holding some poorly performing stocks, such as African Minerals (coal mining) and Quindell (technology), which are both very different in nature. On the flip side, stocks such as Prudential have delivered strong returns.

‘The fund has always taken a long-term investment approach. If the majority of the stocks he has bought offer value, then in time this will be recognised and performance should return. But the market remains in a fickle mood and I don’t think we’ll see performance change a great deal for a little while yet.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

‘Tom Dobell has had a very tough time in recent years. The portfolio has taken on a more esoteric look than it had some years back and while I believe it is staying true to its recovery ethos, the mix of stocks is probably as wide as it has ever been.

‘He has suffered from holding some poorly performing stocks, such as African Minerals (coal mining) and Quindell (technology), which are both very different in nature. On the flip side, stocks such as Prudential have delivered strong returns.

‘The fund has always taken a long-term investment approach. If the majority of the stocks he has bought offer value, then in time this will be recognised and performance should return. But the market remains in a fickle mood and I don’t think we’ll see performance change a great deal for a little while yet.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

‘Tom Dobell is a good fund manager but unfortunately his style or preference has not suited recent markets driven by sentiment and where the strongest sectors have been consumer services, food and retail and consumer durables. He has stuck to his style, ignoring the macro, supporting struggling businesses irrespective of their sector, where he sees long-term value. This has served him well over the longer term but is not likely to help the fund to do well in the short term or in all market conditions.’ [These are Archer’s own views and not those of Investec]

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

‘I don’t have any M&G Recovery, I sold the few holdings I had left last year. I like the deep value/recovery/contrarian story (we have money with the Schroder Recovery funds and Alistair Mundy of Investec). However, I think the long-term success of M&G and the Recovery fund is a double edged sword, as it is so large and possibly unwieldy it could take longer than many people expect for performance to turn around.

‘While I agree with his positioning (underweight financials/consumer), 89 holdings in a £7 billion fund with 20% in AIM/other in the current volatile markets will continue to result in some performance pressures, both in capital terms and liquidity.

‘Tom Dobell has an excellent long-term record, and you don’t become a bad manager overnight so I expect him to produce good numbers again but in the short term I believe I could make a better return elsewhere.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

‘I have followed Tom’s career for more than a decade and I really admire the fact his style, approach, investment philosophy and commitment have not changed during this time.

‘Whenever you invest in a fund you need to understand what you are buying. In the £7 billion M&G Recovery fund you are buying a portfolio that is broadly diversified of roughly 100 companies with a leaning to mid cap names, a value bias, high engagement with the corporations he invests in and high conviction. ‘The fund is not afraid to take considerable stakes in the underlying share capital of the companies he invests in and 10% positions are not uncommon. His portfolio turnover is incredibly low and the fund tends to have a lower beta than the market.

‘Taking this into consideration, it isn’t surprising he hasn’t partaken in the beta rally of the last few years in the UK market. It is a great diversifier for other UK All Companies funds. M&G has faith in him as the manager to see it through this rough patch; so do I.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

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